BUSINESS ALERT: Business owners must now disclose beneficial ownership to the federal government
Congress recently passed a law requiring the disclosure of certain information regarding the ownership and control of entities created through state filings. The Corporate Transparency Act requires certain entities (corporations, limited liability companies, certain partnerships, etc.) to disclose to the federal government the following information for (1) anyone who owns at least 25% of the entity, and (2) anyone who has substantial control over the entity:
- Full legal name
- Date of birth
- Current residential address
- Identification number (taxpayer identification number, driver’s license number, other state identification number)
- Image of identifying document (U.S. Passport, driver’s license)
While certain entities are excluded from the disclosure requirements, the vast majority of entities must disclose. Business owners will do well to review their entity type and structure to determine if they must comply, and to compile the proper information to do so.
The effective date of this law is January 1, 2024. Any entity formed before then has one year to disclose this information. Any entity formed on and after this date has 30 days to disclose. The penalties for failure to disclose are steep and accrue daily. While this filing is not an annual requirement (it’s more-or-less a one-time filing), entities are required to update their disclosures regularly to account for name changes, address changes, and other changes that may trigger further disclosure.
If you are concerned about this new law or have questions, feel free to reach out to Mulhall Zion LLC for further insight and assistance. Our office anticipates posting additional information as the effective date nears. We are able to assist small businesses in complying with these disclosure forms, so if this is of interest, please reach out for details on cost, documents and information needed, and a timeline.
The purpose of this Alert is to provide general information, and it is not intended to provide, does not provide, and should not be relied upon as, legal advice.
Attorney Nathan Zion spends much of his practice assisting small to mid-size business owners, helping them navigate the ups and downs that accompany ownership. He regularly helps owners form companies and assists with corporate maintenance, serving as outside general counsel.
